Utilizing the Energy Output of Cryptocurrency MinesAugust 24, 2019
In the world of crypto miners, most things usually come down to expenses. For example, what is the hash rate of a network and how feasible is to invest in rigs to get a certain return? Or, how can a crypto mine facility attain the best conditions for cooling and thus spend the least amount of money on the same external process? The second factor alone brought about a small revolution in the crypto mining expansion in the north of Europe and North America.
But, there is also another aspect that is regularly missing in these types of discussions – how can a crypto mining process be optimized to generate more money, but not from crypto tokens? This does not include things like diversifying into render farms or some similar SaaS option, but something much more mechanical – using the excess heat that comes from cooling of the crypto mining rigs. Now, it appears that there is a chance that the same heat can be used as communal utility and in the long run, it could be a game-changer for the industry.
The CEO of Hotmine Company is Oles Slobodenyuk. He is at the head of a business venture that is pitching a perfect product to a perfect audience. His product is a bitcoin mining rig that provides a home with a heating appliance. His company is doing this nowhere else than Irkutsk in Eastern Siberia in Russia. This location is world-famous for its cold winters where the temperature often falls well below zero.
A few weeks ago, Slobodenyuk took the state at a crypto event called the Baikal Blockchain and Crypto Forum. There, he had the same device to showcase to the audience and it had a real, full-size radiator attached to it. Slobodenyuk said that his company is looking to sell almost a quarter of a million of these devices to the residents of Irkutsk. The company from Ukraine is however even more ambitious.
Its goal is to attain a level of 80 percent of all mining rigs using this smart approach to its use and reuse of hot air that comes from production. The same process will also protect the wider bitcoin network because it would provide that critical element that has been steadily dropping – decentralization. He envisions the presence of a stable node in many homes, which would be a stark contrast to today’s picture of most mines being megastructures set in countries like China.
Mining Pool Control
The vision of this startup might be even bolder when the numbers are considered. Currently, the four largest mining pools are in control of around 60 of the bitcoin total hash rate. But, Hotmine desires to employ direct economic incentives to change this status in favor of the individual miners. Some calculations back this up.
A Hotmine miner offers calculations that are 8 tera hashes per second and the current BTC price means that 1 th/sis worth about $7.2 per month. That means that one heater rig would be able to provide about $55 to the operator. At the same time, a single unit provides heat to a space of around 10 square meters. This means that the energy expenditure would serve two purposes – heating the space and allowing the owner to earn money from crypto mining.
On one hand, the concept might seem like a big stretch because of the added demand for a stable internet connection and the software back end that actually does something with the mined BTC. But, Heatminer is not a new concept that has never been tested before.
The notion of a crypto miner using energy for cooling and wasting the heat they make is not something that people have not noticed before. In 2018, a company in France by the name of Qarnot developed a mining heater on a CPU platform that mines inside of the ethereum network. Other before have also tried to define ways big and small how the energy used in crypto mining can be reused.
But, Hotmine has one thing going for it – it is pitching a concept in a region of the world where it will likely very much resonate with many homeowners. In Irkutsk, the price of energy is between one and two cents per kilowatt-hour. This means that a single rig would use $10 to operate for a month and effectively work for free as it generates about $40 in profits.
Even if the price of BTC drops to the lowest point since 2014, it would still work for free in the sense that the cost of electricity – those $10 – would be covered. Slobodenyuk even claims that the future halving of the rewards offered to miners would not hurt this calculation. As long as a Hotmine rig works in this range of electricity price, it is viable.
At the presentation, Slobodenyuk was asked about the issue of having his clients learn how to use digital wallets and crypto exchanges. He replied by saying that the company understood that not only hardware, esports players, social media, and general tech enthusiasts would be using their rigs. This is why the company opted to have their clients redirected to a crypto service provider.
This company would take their crypto earnings, exchange it to fiat and then just deposit it at the clients’ regular bank accounts. At some point, if the users want to move into the same venture themselves and cut out the crypto service provider, they will have the full freedom to do the same. Of course, there are plenty of other issues that might impact the functioning of the entire scheme. Hotmine began working in 2013 when it offered local residents in Ukraine crypto-powered boilers.
However, while they began working just fine, their chips became obsolete after about two years. The replacement was too expensive for many owners so they simply moved to old heating options. This will be an issue once again, but hopefully, Hotmine and other businesses trying to use the energy will find a workable way around replacements. One thing is for sure – the world needs more effective use of all kind of energy expenditure, even that of crypto mining.